The International Monetary Fund has agreed to provide $368.4 million (KSh37 billion) credit to the Democratic Republic of Congo. The funds are meant to assist the country meet its foreign reserve needs.
The decline in commodity prices and reckless spending in DRC led to a huge drop in the country’s reserves, hence the need for a credit facility from IMF. According to the international lender, DRC is vulnerable to economic shocks.
Real GDP growth is projected to decelerate to 4.5% in 2019 from 5.8% in 2018. The recent fall in commodity prices, new spending initiatives, and looser spending oversight during the political transition period have led to a weaker fiscal position mostly financed by the central bank. In this context, international reserves have fallen to critically low levels creating urgent balance of payment needs.
A statement from the IMF
IMF is therefore confident that DRC’s new government will implement measures that promote macroeconomic stability and improve governance in the troubled nation.
Mineral rich DRC plans to increase government revenue collection by enhancing mining revenue forecasting, and enforcing the personal finance tax. Additionally, the new leadership intends to introduce stringent spending limits, improve the effectiveness of monetary policy, and promote private sector growth.
